Bonds retreat on fresh selling ahead of key macro data

After rallying for three straight trading sessions, government bonds (G-Secs) dropped modestly following renewed selling pressure from corporates as well as foreign funds.
Bond traders showed some cautiousness ahead of key economic data of industrial production (IIP) for June and consumer price index (CPI) for July and also preferred to lighten their positions ahead of a long week-end.
The government bonds witnessed a sharp rally in last few days, while yields plunged to a fresh three-year low on the back of strong RBI policy measures alongiwth adequate provision of liquidity.
However, the inter-bank call money rates staged a rebound due to good demand from borrowing banks in the face of tight liquidity conditions in the banking system.

The benchmark 7.59 per cent government security maturing in 2026 declined to Rs 103.2975 from Rs 103.43 yesterday, while its yield rose to 7.10 per cent from 7.08 per cent.
The 7.59 per cent government security maturing in 2029 slipped to Rs 103.67 as against Rs 103.7350 previously, while its yield inched up to 7.14 per cent from 7.13 per cent.

The 7.88 per cent government security maturing in 2030 fell to Rs 106.3725 from Rs 106.50, while its yield moved up to to 7.14 per cent from 7.12 per cent.
The 7.61 per cent government security maturing in 2030, the 7.68 per cent government security maturing in 2023 and the 7.72 per cent government security maturing in 2025 were also quoted lower at Rs 104.43, Rs 103.3050 and Rs 103.6750,respectively.

The overnight borrowing rate ended higher at 6.35 per cent from Thursday's closing value of 6.20 per cent. It moved in a range of 6.65 per cent and 6.30 per cent during the day.
Meanwhile, Reserve Bank of India (RBI), under the Liquidity Adjustment Facility (LAF), purchased securities worth Rs 32.06 billion in 7-bids at four-day overnight repo auction at a fixed rate of 6.50 per cent this evening.
It sold securities worth Rs 23.47 billion from 20-bids atthe reverse repo auction at a fixed rate of 6.00 per cent late yesterday.